Fuel is cheaper, but airfares remain relatively high. Why?

With fuel prices are at their lowest levels in several years, can you guess how much money airlines have already saved?

Let's put it this way. It's a significant amount. 

Most U.S. airlines have reported in the past month that they're paying near $2.75 per gallon for jet fuel. That's down from the average of $3.05 they paid last year on fuel bought in the U.S. And it's off even more from 2012, when U.S. carriers paid $3.19 per gallon, according to Bureau of Transportation Statistics data. 

How much fuel does it take to operate an airplane? Quite a bit, as this slide from a recent Allegiant Air presentation to investors shows. Allegiant only operates four types of airplanes, but you can get the idea. 

Flying a Boeing 757 from Los Angeles to Honolulu, Allegiant burns about 5,000 gallons of fuel. If the airline saves a quarter on every gallon, it'll save around $1,200 in each direction to Hawaii. Every day and across an entire flight network, that adds up. Allegiant estimates fuel accounts for 43% of its total expenses. 

American Airlines president Scott Kirby was asked if lower fuel prices would translate into lower fares. According to the Associated Press, he responded that fares would not decrease.

"Air travel remains a great bargain,” Kirby said. “In a strong demand environment, we don't have plans to go out and just proactively cut fares.”

What airlines might do, however, is add flights. With fuel cheaper, routes that previously were not viable might get a second look. And eventually, if airlines increase the supply of seats without a corresponding increase in demand, fares could fall. 

Then again, fuel costs could rise significantly and this all could become moot.